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Cocoa Prices Surging Again!

Geoff Riley

21st October 2013

 After more than a year of relatively low prices, rising global demand for cocoa is a key factor behind a surge in the international price of cocoa beans, prompting fears that the traditional consumer splurge on chocolate treats during the Festive season will be noticeably more expensive this year! In this short BBC news video, some of the background to the rise in cocoa prices is explored. You can download the cocoa price chart below.

According to a recent report in the Financial Times

"Recovering demand in the US and Europe, the largest chocolate buyers, and dry weather in west Africa, the world's key producing region, have transformed demand and supply prospects.......Weak cocoa prices in the past few years have discouraged investment by farmers. In some producing countries, a growing number of farmers have switched to palm oil and rubber, which offer better yields and returns."

How would you draw a supply and demand diagram to illustrate some of the changes in the conditions of supply and demand contained in the extract above?

More background on the industry here from a news blog appearing on CNN

"The global chocolate confectionery market, already worth $110 billion, is growing by more than 6% per year, according to Euromonitor. Demand in Latin America, the Middle East and Africa is expanding at an even faster pace. And as demand rises, cocoa shortages due to bad weather in major producing countries such as the Ivory Coast, Ghana and Indonesia, are squeezing suppliers."

A blog on the cocoa market from the Wall Street Journal says that world cocoa prices need to rise by a substantial amount to entice farmers back into the cocoa market and renew planting of crops.

"Cocoa processors estimate that prices would need to rise by about $800 a ton to entice farmers to invest more in their plantations."

Download the cocoa price chart


Geoff Riley

Geoff Riley FRSA has been teaching Economics for over thirty years. He has over twenty years experience as Head of Economics at leading schools. He writes extensively and is a contributor and presenter on CPD conferences in the UK and overseas.

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